ECB for limiting bank size, scope

European Central Bank President Jean-Claude Trichet has offered support for a US plan to limit the size and scope of large banks but stressed the need for global coordination, a report said yesterday.

Trichet also urged US lawmakers to confirm Ben Bernanke for another term as Federal Reserve chairman, the Wall Street Journal reported. Bank-reform plans outlined by the White House last week “go in the same direction of our own position, namely ensuring that the banking sector focuses on financing the real economy”, Trichet said.

The ECB was “examining (the Obama proposals) with great care,” Trichet said, amid concerns over whether influential eurozone members Germany and France would approve measures that would limit their own banks, Deutsche Bank and BNP Paribas.

Trichet, also called on bankers to remember their role in the financial crisis, the report said. Some at financial institutions see a return to normalcy “and have forgotten that governments put over 25 per cent of GDP of taxpayer risks on the table”, Trichet said.

Bank balance sheets need to be restored by issuing new shares when possible and compensation practices fixed so the financial sector can “do its job, which is financing appropriately the real economy”, he said.

 

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